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Case Studies by Claudia Zeisberger

31 case studies

by Publication Date
published: 30 Sep 2019

  • Topic: Economics & Finance
  • Industry: Alcoholic Beverages
  • Region: Asia

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Abstract:
The case outlines the investment details regarding Gem India Advisors equity investment in Sula Wines. After winning a 19% marketshare in the Indian Wine market in less than four years, Sula Wines is looking for additional investment to expand its business. The case descibes the opportunities, risks and assumptions associated with the investment.

Pedagogical Objectives:
The case is designed to walk students through the valuation and deal structure of a growth capital investment, using the Sula Wines example. Key topics covered are valuation using DCF and comparables, deal structure, assumptions and post-investment growth initiatives.

Keywords:
Wines, Alcoholic Beverages, Venture Capital, India, Private Equity, Adec, Gpei, Gpei-Case

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published: 30 Sep 2019

  • Topic: Economics & Finance
  • Industry: Alcoholic Beverages
  • Region: Asia

Show details ...

Abstract:
The case outlines the investment details regarding Gem India Advisors equity investment in Sula Wines. After winning a 19% marketshare in the Indian Wine market in less than four years, Sula Wines is looking for additional investment to expand its business. The case descibes the opportunities, risks and assumptions associated with the investment.

Pedagogical Objectives:
The case is designed to walk students through the valuation and deal structure of a growth capital investment, using the Sula Wines example. Key topics covered are valuation using DCF and comparables, deal structure, assumptions and post-investment growth initiatives.

Keywords:
Wines, Alcoholic Beverages, Venture Capital, India, Private Equity, Adec, Gpei, Gpei-Case

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published: 23 Apr 2018

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Abstract:
Private equity firm Clayton, Dubilier & Rice (CD&R) is preparing a bid for leading US car rental agency Hertz. By replacing Hertz’s top managers, improving capital management and driving down operating costs, CD&R sees an opportunity to nearly double EBITDA. However, the turnaround involves significant risks, which CD&R must weigh in preparing its bidding strategy. Students are required to assess and value the business, evaluate a post-acquisition operating turnaround plan requiring new leadership, select a financial structure to mitigate significant cyclicality, and craft a winning bidding strategy in the context of a competitive auction.

Pedagogical Objectives:
This case underscores the importance of creating a differentiated investment thesis (no matter how slight the advantage) in a competitive auction setting, inviting students to develop and support their own investment thesis. It demonstrates how the operating capabilities of PE firms (like CD&R) translate into a valuation exercise, investment thesis and operating plan. It explores how the firm’s strategic bent shapes its bidding strategy and willingness to pay for a business that has the prospect of achieving high returns for its fund, as well as identifying sources of advantage in deal sourcing, expertise partnering and turnaround management in the private equity domain.

Keywords:
Private Equity, Winner’s Curse, Auction, Turnaround, Bidding, Rental Car, Investment Strategy, Investment Thesis, Due Diligence, Hertz, Ford, Valuation, Synergies, Operating Efficiency

published: 29 Jan 2018

  • Topic: Strategy
  • Industry: Financial Transactions Processing, Reserve and Clearing House Activities
  • Region: Middle-East

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Abstract:
In 2010, ACTIS embarked on an ambitious project to build a pan-Middle East and Africa (MEA) payments platform. It had purchased Mediterranean Smart Cards Company (MSCC), a bankcard issuer with operations across Africa, and had identified a follow-on target, Visa Jordan Card Services (VJCS) as part of its buy-and-build strategy, and another potential acquisition in South Africa. These could enable the ACTIS platform to capture the entire value chain in the payments business in the MEA region. However, not long after the purchase of MSCC, political turmoil engulfed the Arab world, prompting the ACTIS investment committee in London to question the viability of creating a payments platform in MEA.

Pedagogical Objectives:
The case discusses the complexity and risks of investing in emerging markets, specifically “frontier markets”, which have the highest growth potential but involve the most uncertainty and risks. It enables students to understand the challenge of a goal-based investment thesis such as a buy-and-build within the context of emerging markets (i.e. Africa and the Middle East) and the options for mitigating risks.

Keywords:
Middle East, Payments Platform, Payments Processing, Roll Up, Buy and Build, Private Equity

published: 15 Dec 2017

  • Topic: Entrepreneurship
  • Industry: Local and Suburban Passenger Transportation
  • Region: Middle-East

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Abstract:
Careem, a Dubai-based ride-hailing company, was founded in 2012 in the United Arab Emirates (UAE) by two ex-McKinsey consultants who saw a gap in the transport market. Started as a web-based car booking service for corporate clients, Careem had evolved into a leading application-based booking service in the Middle East and North Africa (MENA) region, with a differentiated business model tailored to the tastes and preferences of Middle Eastern consumers. Fuelled by venture capital funding rounds in September 2013 and December 2014, Careem was again on the fundraising trail in 2015 for a Series C investment round to further scale its existing business and continue its roll-out across MENA. The Abraaj Group, a leading emerging markets private equity investor, was interested, but with Uber competing fiercely in the MENA region, it had to decide whether Careem could compete with its well-funded global competitor.

Pedagogical Objectives:
This case helps students understand: • The evolution of a successful start-up, from concept to funding to scaling. • The challenges faced by operators of early-stage companies and the key questions and metrics considered by investors in early-stage companies. • The convergence of traditional venture capital and private equity roles in the late-stage venture capital market. • How private equity investors add value to their portfolio companies and differentiate themselves in the market. • How global business models in the “new economy” can be modified and refined to suit consumer preferences and provide a competitive advantage in emerging markets.

Keywords:
Ride-Hailing, Mena, Smart Devices, Digital Disruption, Smart Apps, Uber, Start-Up, Private Equity

published: 28 Aug 2017

  • Topic: Entrepreneurship
  • Industry: Private Equity
  • Region: Europe

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Abstract:
In May 2012, private equity firm KKR is considering the buyout of WMF group (WMF), a diversified kitchenware and professional coffee machine manufacturer headquartered in Geislingen, Germany. The deal seems a potentially compelling investment opportunity, with various options for value creation – expanding WMF’s well-established brand to other geographies as well as reducing costs. Priorities must be set, however, to generate an attractive return by the end of the investment period. The deal team has to decide which business segments are worth putting more resources into and which to divest, which brands should be kept and which to trim off, and how to take up any operational slack without affecting the overall strategy.

Pedagogical Objectives:
This case emphasizes private equity firms’ focus on operational value creation in a large buyout, in particular the process of analysing the potential for returns by improving operations in the target company. This differs from classic studies on takeovers based purely on financial metrics. Presenting a concrete example of the potential for PE to improve the competitive positioning, operations and culture of a portfolio company, the case provides an inside view of the way deal teams evaluate potential acquisitions. It also shows the challenges posed by the target company’s capital structure that must be addressed, and how this affects the potential for value creation.

Keywords:
Private Equity, Buyout, Lbo, Operational Value Creation, Retail, E-Commerce, Growth Strategy, Europe, Germany

published: 29 May 2017

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Abstract:
In 2011, Partners Group is nearing the end of a year-long quest for a new mandate from a European pension fund, Future Plan. The fund has struggled with its 6-year old PE programme, consistently falling short of its target allocation to the asset class and generating poor returns, seemingly always one step behind the opportunity in the market. Future Plan has built its PE programme by investing in closed-end funds of PE products managed by two executives, one focused on European markets, the other on global markets. But the fallout from the global economic crisis wreaked havoc with Future Plan’s PE programme and something has to change. With an interest in expanding its PE activity to include secondary and direct investment strategies, Future Plan begins a manager search process with one goal in mind: to achieve the target return to the asset class by 2014. The case charts Partners Group’s role in the selection process and how its expertise and services, along with a novel holding structure, offer a way to achieve Future Plan’s goals.

Pedagogical Objectives:
This case provides a ringside seat to follow the actions taken by a medium-sized pension fund when managing its private equity portfolio allocation. Students explore the rationale behind making investment decisions, the key challenges faced by institutional investors when constructing and managing a PE portfolio, and compare the characteristics of primary, secondary and direct PE investments. The case provides data and a step-by-step guide for students to develop an investment strategy (across these three categories) that will enable Future Plan to hit its target allocation to PE by year-end 2014 and achieve its goals.

Keywords:
Private Equity, Partners Group, Pension Fund, Institutional Investor, Portfolio Construction, Portfolio Management, Portfolio Optimization, Target Asset Allocation, Global Financial Crisis, Direct Investment, Secondary Investment, Primary Fund Commitment, Limited Partner, Private Equity Programme

published: 30 Jan 2017

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Abstract:
In 2011, Ingersoll-Rand (IR) decided to divest its refrigeration equipment subsidiary, Hussmann International. However, the routine auction process for the non-core asset went awry when both Hussmann’s performance and external finance markets weakened significantly during the due diligence period. IR’s agent, JP Morgan, sought interest from potential buyers and focused on a few leading buy-out firms that submitted bids. After not seeing eye-to-eye with the initial auction winner, Ingersoll-Rand engaged exclusively with a lower bidder, the private equity firm Clayton, Dubilier & Rice. The challenge for CD&R is to develop a deal structure that can meet both parties’ needs, offering enough value to Ingersoll-Rand to keep them from walking away, yet taking into account the increased riskiness of Hussmann’s recent performance to justify CD&R’s valuation. The student takes the perspective of CD&R.

Pedagogical Objectives:
This case aims to build students’ awareness of the challenging PE landscape and shows how one PE firm has found new ways to source and structure deals in order to maintain attractive returns in an overpriced acquisition atmosphere. Successful strategies to outperform in an overheated market are rare, but leading firms find ways to gain sourcing advantage and/or utilize skills to improve underperforming businesses to drive them to the top return quartile. The case examines both return strategies with an inside look at Clayton, Dubilier & Rice’s “recipe for bubbles”.

Keywords:
Private Equity, Auction, Auction, Carve Out, Structuring, Earnings Surprise, Management Change, Growth Capital, Corporate Carve Out, Restructuring, Due Diligence, Divestiture, Operational Improvements, Turnarounds, Gpei, Gpei-Case

published: 26 Aug 2016

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Abstract:
The case describes how the Pro-invest Group – a boutique investment firm specialising in private equity real estate and real estate asset management – built its business and raised a first-time private equity fund. The Pro-invest founders had boot-strapped the business since its inception in 2013, but in-house funds were running out by mid-2014 and they needed third-party capital to take the venture to the next level. After deciding on a suitable fund structure, the Pro-invest team hits the fundraising trail. Turmoil erupts when a potential investor pulls out at the last minute, leaving the team in shock to re-evaluate its fundraising options. The case explores the pros and cons of each option in detail.

Pedagogical Objectives:
The case allows students to evaluate the different options when creating a new fund, and more generally to understand the fundraising options available for PE funds, especially first time funds. They should be able to: 1. Understand the central elements (e.g. control, economics) that private equity fund managers consider when raising capital. 2. Gain insight into the fundraising dynamics in the real estate private equity industry. 3. Step into the shoes of a fund manager’s Management Committee and evaluate the pros and cons of the various fundraising options, from institutional investors to family offices. 4. Appreciate the questions and due diligence requirements of large institutional investors before allocating funds to a real estate PE fund. 5. Appreciate the challenges of balancing the efforts of fundraising and executing investments in parallel, in particular when raising a first-time fund.

Keywords:
Private Equity, Real Estate, Fundraising, Australia, Hotel Industry, First-Time Fund, Fund Structure, Global Financial Crisis, Pere, Family Office, Gpei, Gpei-Case

published: 22 Jul 2016

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Abstract:
This two-party case is designed to teach negotiation within the context of turnaround management, stakeholder management, change management or public sector negotiation. The negotiation between Sudhir Kumar, Officer on Special Duty to the Minister of Railways, and Gaurav Malik, Chief Engineer, is about how to maximise revenues for the ailing Indian Railways, notably by increasing rolling stock axle loads without compromising safety. The case emphasizes the tension between commercial gains and social needs, but also lends itself to discussions about safety, corruption, government and business in India.

Pedagogical Objectives:
• Mapping out stakeholder engagement negotiations • Change management in power-distributed organizations • Negotiating under suspicion • Using negotiation to go from novice to expert • Negotiating corruption • Cross-cultural negotiations, but not cross-border or international • Negotiating conflicting financial and social goals

Keywords:
Negotiation, Turnaround in Power-Distributed Organizations, Stakeholder Management, Change Management, Suspicion, Corruption, Public Sector, Railway, Rolling Stock, Train, Cross-Cultural Negotiation, Conflict of Interests, Internal Negotiations, Internal Negotiations, Power Asymmetry, From Novice to Expert, Gpei, Gpei-Case

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